J M Baxi Ports & Logistics Ltd and Indian Potash Ltd signs JV concession agreement with Visakhapatnam Port Authority

VISAKHAPATNAM : Vizag Multipurpose Terminal Pvt Ltd, an equal joint venture between J M Baxi Ports & Logistics Ltd and Indian Potash Ltd, has signed a concession agreement with Visakhapatnam Port Authority for mechanising and operating a multi-purpose cargo berth at the State-owned port on a 30-year contract.

K Rama Mohana Rao, Chairman, Visakhapatnam Port Authority, said that the port authority has signed the concession agreement with Vizag Multipurpose Terminal.

A concession agreement sets out the terms and conditions of a port contract and sets the project in motion.

The J M Baxi Ports & Logistics-Indian Potash team placed the highest royalty of Rs55.44 a ton for the project to emerge the successful bidder on a tender issued by Visakhapatnam Port Authority.

Port tenders at major ports (owned by the Centre) are decided on the basis of royalty per ton – the entity willing to share the highest royalty per ton of cargo handled at the berth with the port authority wins the deal for 30 years.

The royalty payable will rise annually in tandem with the increase in wholesale price index (WPI), a measure of costs. The terminal operator will be free to set market rates under the new Major Port Authorities Act and the model concession agreement (MCA).

Indian Potash Ltd – more than 70 percent owned by fertiliser co-operatives- is India’s biggest fertiliser importer and the second largest buyer of fertilisers in the global market. Indian Potash imports fertilisers through all the Indian ports and it is the only company in India which handles fertilisers throughout the year at all ports.

This will be the fourth contract win for J M Baxi Ports & Logistics at a State-owned major port in recent times. Mumbai-based J M Baxi Ports & Logistics, India’s third most valued logistics company, secured contracts last year to run container terminals at Jawaharlal Nehru Port and V O Chidambaranar Port (formerly Tuticorin Port) and the shallow water/coastal berths at J N Port.

The contract at Visakhapatnam Port involves mechanising the eastern coast port’s East Quay berth 7 (EQ7) for handling bulk cargo including fertilisers with private funds worth Rs201 crores. When mechanised, the EQ7 berth will have a capacity to handle 3.61 million tonnes (mt) of cargo a year.

The project is part of the national monetisation pipeline (NMP) of the government wherein operational infrastructure assets including port terminals will be privatised through the public-private-partnership (PPP) route.

J M Baxi Ports & Logistics separately runs a 1.5 million twenty-foot equivalent units (TEUs) capacity container terminal at Visakhapatnam Port.

A TEU is the standard size of a container and a common measure of capacity in the container business.

In January, German container shipping line Hapag-Lloyd AG said it has signed binding agreements to acquire a 40 percent stake in J M Baxi Ports & Logistics Ltd for an undisclosed amount.